How To Bake A Pie With Washington Apple

medium119487557Trump’s policy of reciprocal tariffs kicks in from April 2. The big question for India is how to navigate this tariff turbulence…Can India make a win-win of it? Answer’s yes, if India smartly plays its cards. Agriculture will be slightly difficult to tackle, but even here, India can drive a bargain. How does India do this?First, India’s agricultural tariffs (39%) on average are 7.8 times US’s agri-tariffs of 5%, way higher than what Indian agriculture really needs. It makes India an outlier. It prompts Trump to call India “tariff king”. Take the case of rice for instance. India is world’s largest exporter of rice but imposes a 70% tariff on its import. This can simply be slashed to 10-15% without harming farmers here.Shrimp is India’s largest agri-export to US. India has a net surplus of agri-trade with US. US imposes a 0-5% duty on shrimp and other marine products from India. If India wants to protect this market, critical for its fishery sector, it’ll have to open its own agri-markets in which US shows interest.India’s largest agri-import item from US is almonds, and attract 10% import duty. Washington apples attract 15% duty. So why, one can ask, does India impose 100% duty on walnuts? This too can be reduced to 10-15%. Similarly cranberries, blueberries, all can be opened for import. The basic principle for negotiating is to reduce tariffs on those commodities that India doesn’t produce or produces in very small quantities. This’ll not only placate US in trade negotiation, India will also no longer be crowned tariff king. South Korea’s agri-tariffs are even higher (57%) than India’s 39% and Türkiye has a 40% tax, per WTO.US’s interest would be in other commodities such as soybean, corn, and even wheat. India bans soybean and corn imports on the pretext of these being GM crops. But reality is that India’s own food system already has GM cotton, and its seed and seed oil is sold for both human and non-human consumption. So, India will have to shed its hypocrisy of banning GM crops.Corn can be imported primarily to make ethanol as well as feed for poultry. Current duty of 50% can be gradually reduced to 15-20%. Similarly, soybean is basically a protein crop for feed. Its current duty of 45% can be reduced and made equal to the duty on soya oil, 20%. Wheat is more sensitive, and its current duty of 40% can be negotiated to be halved to 20% in stages. If New Delhi is yet uncomfortable, this can be placed under tariff rate quota. A similar approach may be called for in import of Skimmed Milk Powder (SMP), where current duty is 60%.In return, India can ask for easier market access for fruits and vegetables, from pomegranate, mangoes, grapes and bananas to all sorts of vegetables. This segment can easily compete in US markets, provided export value chains are streamlined. Similarly, multiple varieties of rice and food preparations can make major inroads. Onus lies on us to build effective export lines for US, taking care of their Sanitary and Phytosanitary Standards (SPS). This is critical to ensure food safety, and can easily be negotiated on, and regulatory procedures streamlined.India’s approach to Trump’s reciprocal tariff policy must not be combative, but constructive. The Trump-Modi meet resulted in Mission 500 — more than doubling bilateral trade to $500bn by 2030. Achieving this requires a balanced approach, opening trade flows both ways.A starting point for India could be to go beyond agriculture and increase energy imports of crude oil and gas, which India already purchases from various countries. India can top this up with defence purchases. That’ll help correct the trade imbalance that’s currently in favour of India.India need not retaliate to reciprocal tariffs, can lower them where feasible, and negotiate for better market access for Indian products, particularly labour-intensive ones, like textiles and leather products, and agri-products. India can thus secure its place in global trade, especially where China will vacate some space in US markets.Gulati is distinguished professor, Rao senior fellow & Suntwal research assistant at ICRIER. Views are personal